SAFE Lending Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1509 To amend the Truth in Lending Act to address certain issues relating to the extension of consumer credit, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 5, 2019 Ms. BONAMICI (for herself and Mr. CUMMINGS) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Truth in Lending Act to address certain issues relating to the extension of consumer credit, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stopping Abuse and 4 Fraud in Electronic Lending Act of 2019’’ or the ‘‘SAFE 5 Lending Act of 2019’’. 6 SEC. 2. CONSUMER CONTROL OVER BANK ACCOUNTS. 7 (a) PROHIBITING UNAUTHORIZED REMOTELY CRE- 8 ATED CHECKS.—Section 905 of the Electronic Fund 9 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 2 •HR 1509 IH Transfer Act (15 U.S.C. 1693c) is amended by adding at 1 the end the following: 2 ‘‘(d) LIMITATIONS ON REMOTELY CREATED 3 CHECKS.— 4 ‘‘(1) DEFINITION.—In this subsection— 5 ‘‘(A) the term ‘remotely created check’ 6 means a check, including a paper or electronic 7 check and any other payment order that the 8 Bureau, by rule, determines is appropriately 9 covered under this subsection, that— 10 ‘‘(i) is not created by the financial in- 11 stitution that holds the customer account 12 from which the check is to be paid; and 13 ‘‘(ii) does not bear a signature ap- 14 plied, or purported to be applied, by the 15 person from whose account the check is to 16 be paid; and 17 ‘‘(B) the term ‘Federal consumer financial 18 law’ has the meaning given the term in section 19 1002 of the Consumer Financial Protection Act 20 of 2010 (12 U.S.C. 5481). 21 ‘‘(2) LIMITATIONS.—Subject to the limitations 22 in paragraph (3) and any additional limitations that 23 the Bureau may establish, by rule, a remotely cre- 24 ated check may only be issued by a person des- 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 3 •HR 1509 IH ignated in writing by a consumer with that written 1 designation specifically provided by the consumer to 2 the insured depository institution at which the con- 3 sumer maintains the account from which the check 4 is to be drawn. 5 ‘‘(3) ADDITIONAL LIMITATIONS.— 6 ‘‘(A) IN GENERAL.—A designation pro- 7 vided by a consumer under paragraph (2) may 8 be revoked at any time by the consumer. 9 ‘‘(B) CONSUMER FINANCIAL PROTECTION 10 LAWS.—No payment order, including a re- 11 motely created check, may be issued by any per- 12 son in response to the exercise of, or attempt to 13 exercise, any right by a consumer under— 14 ‘‘(i) any Federal consumer financial 15 law; or 16 ‘‘(ii) any other provision of any law or 17 regulation within the jurisdiction of the 18 Bureau.’’. 19 (b) CONSUMER PROTECTIONS FOR CERTAIN ONE- 20 TIME ELECTRONIC FUND TRANSFERS.—Section 913 of 21 the Electronic Fund Transfer Act (15 U.S.C. 1693k) is 22 amended— 23 (1) in the matter preceding paragraph (1), by 24 inserting ‘‘(a) IN GENERAL.—’’ before ‘‘No person’’; 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 4 •HR 1509 IH (2) in subsection (a)(1), as so designated, by 1 striking ‘‘preauthorized electronic fund transfers’’ 2 and inserting ‘‘an electronic fund transfer’’; and 3 (3) by adding at the end the following: 4 ‘‘(b) TREATMENT FOR ELECTRONIC FUND TRANS- 5 FERS IN CREDIT EXTENSIONS.—If a consumer voluntarily 6 agrees to repay an extension of a small-dollar consumer 7 credit transaction, as defined in section 110(a) of the 8 Truth in Lending Act, by means of an electronic fund 9 transfer, the electronic fund transfer shall be treated as 10 a preauthorized electronic fund transfer subject to the pro- 11 tections of this title.’’. 12 SEC. 3. TRANSPARENCY AND CONSUMER EMPOWERMENT 13 IN SMALL-DOLLAR LENDING. 14 (a) SMALL-DOLLAR CONSUMER CREDIT TRANS- 15 ACTIONS.— 16 (1) IN GENERAL.—The Truth in Lending Act 17 (15 U.S.C. 1601 et seq.) is amended— 18 (A) by inserting after section 109 (15 19 U.S.C. 1608) the following: 20 ‘‘SEC. 110. REGISTRATION REQUIREMENT FOR SMALL-DOL- 21 LAR LENDERS. 22 ‘‘(a) DEFINITION.—In this section, the term ‘small- 23 dollar consumer credit transaction’— 24 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 5 •HR 1509 IH ‘‘(1) means any transaction that extends credit 1 that is— 2 ‘‘(A) made to a consumer in an amount 3 that— 4 ‘‘(i) is not more than— 5 ‘‘(I) $5,000; or 6 ‘‘(II) such greater amount as the 7 Bureau may, by rule, determine; and 8 ‘‘(ii) shall be adjusted annually to re- 9 flect changes in the Consumer Price Index 10 for all urban consumers published by the 11 Department of Labor; and 12 ‘‘(B) extended pursuant to an agreement 13 that is— 14 ‘‘(i)(I) other than an open end credit 15 plan; and 16 ‘‘(II) payable in one or more install- 17 ments of less than 12 months (or such 18 longer period as the Bureau may, by rule, 19 determine); 20 ‘‘(ii) an open end credit plan in which 21 each advance is fully repayable within a 22 defined time or in connection with a de- 23 fined event, or both; or 24 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 6 •HR 1509 IH ‘‘(iii) any other plan as the Bureau 1 determines, by rule; and 2 ‘‘(2) includes any action that facilitates, bro- 3 kers, arranges, or gathers applications for a trans- 4 action described in paragraph (1). 5 ‘‘(b) REGISTRATION REQUIREMENT.—A person shall 6 register with the Bureau before issuing credit in a small- 7 dollar consumer credit transaction.’’; and 8 (B) in section 173 (15 U.S.C. 1666j), by 9 adding at the end the following: 10 ‘‘(d) Notwithstanding any other provisions of this 11 title, any small-dollar consumer credit transaction, as de- 12 fined in section 110(a), shall comply with the laws of the 13 State in which the consumer to which the transaction is 14 made resides with respect to annual percentage rates, in- 15 terest, fees, charges, and such other similar or related 16 matters as the Bureau may, by rule, determine if the 17 small-dollar consumer credit transaction is— 18 ‘‘(1) made over— 19 ‘‘(A) the Internet; 20 ‘‘(B) telephone; 21 ‘‘(C) facsimile; 22 ‘‘(D) mail; 23 ‘‘(E) electronic mail; or 24 ‘‘(F) other electronic communication; or 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 7 •HR 1509 IH ‘‘(2) conducted by a national bank.’’. 1 (2) TECHNICAL AND CONFORMING AMEND- 2 MENT.—The table of sections for chapter 1 of the 3 Truth in Lending Act (15 U.S.C. 1601 et seq.) is 4 amended by inserting after the item relating to sec- 5 tion 109 the following: 6 ‘‘110. Registration requirement for small-dollar lenders.’’. (b) PROHIBITION ON CERTAIN FEES.—Section 915 7 of the Electronic Fund Transfer Act (15 U.S.C. 1693l– 8 1) is amended— 9 (1) in subsection (a)(2)(A), in the matter pre- 10 ceding clause (i), by striking ‘‘The term’’ and insert- 11 ing ‘‘Subject to subsection (d)(1), the term’’; 12 (2) by redesignating subsection (d) as sub- 13 section (e); and 14 (3) by inserting after subsection (c) the fol- 15 lowing: 16 ‘‘(d) ADDITIONAL FEES PROHIBITED.— 17 ‘‘(1) DEFINITION.—In this subsection, the term 18 ‘prepaid account’ has the meaning given the term by 19 rule of the Bureau. 20 ‘‘(2) PROHIBITION.—With respect to the use of 21 a prepaid account by a consumer— 22 ‘‘(A) it shall be unlawful for any person to 23 charge the consumer a fee for an overdraft, in- 24 cluding a shortage of funds or a transaction 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 8 •HR 1509 IH processed for an amount exceeding the account 1 balance of the prepaid account; 2 ‘‘(B) any transaction for an amount ex- 3 ceeding the account balance of the prepaid ac- 4 count may be declined, except that the con- 5 sumer may not be charged a fee for that pur- 6 pose; and 7 ‘‘(C) the Bureau may, by rule, prohibit the 8 charging of any fee so that the Bureau may— 9 ‘‘(i) prevent unfair, deceptive, or abu- 10 sive practices; and 11 ‘‘(ii) promote the ability of the con- 12 sumer to understand and compare the 13 costs of prepaid accounts.’’. 14 SEC. 4. RESTRICTIONS ON LEAD GENERATION IN SMALL- 15 DOLLAR CONSUMER CREDIT TRANSACTIONS. 16 (a) IN GENERAL.—Chapter 2 of the Truth in Lend- 17 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 18 at the end the following: 19 ‘‘SEC. 140B. RESTRICTIONS ON LEAD GENERATION IN 20 SMALL-DOLLAR CONSUMER CREDIT TRANS- 21 ACTIONS. 22 ‘‘(a) DEFINITIONS.—In this section— 23 ‘‘(1) the terms ‘Internet access service’ and 24 ‘Internet information location tool’ have the mean- 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 9 •HR 1509 IH ings given those terms in section 231(e) of the Com- 1 munications Act of 1934 (47 U.S.C. 231(e)); 2 ‘‘(2) the term ‘sensitive personal financial infor- 3 mation’ means a Social Security number, financial 4 account number, bank routing number, bank ac- 5 count number, or security or access code that is im- 6 mediately necessary to permit access to the financial 7 account of an individual; and 8 ‘‘(3) the term ‘small-dollar consumer credit 9 transaction’ has the meaning given the term in sec- 10 tion 110(a). 11 ‘‘(b) IDENTIFICATION INFORMATION.—Any person 12 facilitating, brokering, arranging for, or gathering applica- 13 tions for, the distribution of sensitive personal financial 14 information in connection with a small-dollar consumer 15 credit transaction shall prominently disclose information 16 by which the person may be contacted or identified, includ- 17 ing for service of process and for identification of the reg- 18 istrant of any domain name registered or used. 19 ‘‘(c) PROHIBITION ON LEAD GENERATION IN SMALL- 20 DOLLAR CONSUMER CREDIT TRANSACTIONS.—No person 21 may facilitate, broker, arrange for, or gather applications 22 for the distribution of sensitive personal financial informa- 23 tion in connection with a small-dollar consumer credit 24 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 10 •HR 1509 IH transaction, unless the person is directly providing the 1 small-dollar consumer credit to a consumer. 2 ‘‘(d) RULE OF CONSTRUCTION.— 3 ‘‘(1) IN GENERAL.—Nothing in this section 4 may be construed to limit the authority of the Bu- 5 reau to further restrict activities covered by this sec- 6 tion. 7 ‘‘(2) CLARIFICATION.—For the purposes of this 8 section, it shall not be considered facilitating the dis- 9 tribution of sensitive personal financial information 10 in connection with a small-dollar consumer credit 11 transaction to be engaged solely in one of the fol- 12 lowing activities: 13 ‘‘(A) The provision of a telecommuni- 14 cations service, an Internet access service, or an 15 Internet information location tool. 16 ‘‘(B) The transmission, storage, retrieval, 17 hosting, formatting, or translation (or any com- 18 bination thereof) of a communication, without 19 selection or alteration of the content of the 20 communication, except the deletion of a par- 21 ticular communication or material made by an- 22 other person in a manner that is consistent 23 with section 230(c) of the Communications Act 24 of 1934 (47 U.S.C. 230(c)).’’. 25 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 11 •HR 1509 IH (b) TECHNICAL AND CONFORMING AMENDMENT.— 1 The table of sections for chapter 2 of the Truth in Lend- 2 ing Act (15 U.S.C. 1631 et seq.) is amended by adding 3 at the end the following: 4 ‘‘140B. Restrictions on lead generation in small-dollar consumer credit trans- actions.’’. SEC. 5. STUDIES. 5 (a) DEFINITIONS.—In this section— 6 (1) the term ‘‘appropriate committees of Con- 7 gress’’ means— 8 (A) the Committee on Banking, Housing, 9 and Urban Affairs of the Senate; 10 (B) the Committee on Indian Affairs of the 11 Senate; 12 (C) the Committee on Financial Services of 13 the House of Representatives; and 14 (D) the Committee on Natural Resources 15 of the House of Representatives; and 16 (2) the term ‘‘Indian tribe’’ has the meaning 17 given the term in section 4 of the Indian Self-Deter- 18 mination and Education Assistance Act (25 U.S.C. 19 5304). 20 (b) STUDY REQUIRED.—Not later than 180 days 21 after the date of enactment of this Act, the Comptroller 22 General of the United States shall conduct a study regard- 23 ing— 24 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 12 •HR 1509 IH (1) the availability of capital on reservations of 1 Indian tribes; and 2 (2) the impact that small-dollar consumer credit 3 extended through Internet and non-Internet means 4 to members of Indian tribes has had on economic 5 opportunity and wealth for members of Indian 6 tribes. 7 (c) CONSULTATION.—In conducting the study re- 8 quired under subsection (b), the Comptroller General of 9 the United States shall consult, as appropriate, with— 10 (1) the Bureau of Consumer Financial Protec- 11 tion; 12 (2) the Board of Governors of the Federal Re- 13 serve System; 14 (3) the Director of the Bureau of Indian Af- 15 fairs; 16 (4) federally recognized Indian tribes; and 17 (5) community development financial institu- 18 tions operating in Indian lands. 19 (d) CONGRESSIONAL CONSIDERATION.—The Comp- 20 troller General of the United States shall submit to the 21 appropriate committees of Congress the study required 22 under subsection (b). 23 VerDate Sep 11 2014 03:31 Mar 16, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1509.IH H1509 kjohnson on DSK79L0C42 with BILLS 13 •HR 1509 IH SEC. 6. RULEMAKING. 1 Not later than 1 year after the date of enactment 2 of this Act, the Bureau of Consumer Financial Protection 3 shall adopt any final rules necessary to implement the pro- 4 visions of this Act and the amendments made by this Act. 5 Æ VerDate Sep 11 2014 [Text truncated for display. Full text available on Congress.gov.]